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In the loop 22 May 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R19.44/$, after closing weaker on Friday (R19.45/$*).
  • EM currencies were mixed on Friday; the PLN (+0.6%), KRW (+0.6%) and HUF (+0.4%) were the biggest gainers; the BRL (-0.7%), ZAR (-0.4%) and IDR (-0.4%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • The US debt ceiling issue is likely to intensify this week as the so-called x-date (1 June), on which the US government may run out of money to fulfil its obligations, approaches.
  • New home sales data for April, due out tomorrow, likely moderated, after surging in March. 
  • Nevertheless, sales volumes are likely to remain well above the trough from July 2022.
  • The US FOMC meeting minutes of the 2-3 May meeting, out on Wednesday, may shed light on whether the committee agrees that 5.25% constitutes the peak, or that rates are sufficiently restrictive.
  • The Q1:23 GDP data, due on Thursday, may show softening economic activity in that quarter.
  • April’s personal consumption and spending data is due out on Friday. 
  • The PCE deflator is expected to have increased by 0.3% m/m in April, from 0.1% m/m in March.
  • UK inflation for April, scheduled for release on Wednesday, is finally expected at single-digits
  • CPI is expected at 8.3% y/y in April, from an increase of 10.1% y/y in March.
  • Eurozone and UK PMI surveys for May are due out this week and will likely provide further insight into how growth is developing amid tighter monetary conditions.
  • The Central Bank of Turkey will meet this week and will likely hold its one-week repo rate at 8.5%, refraining from making any changes ahead of the run-off election. 
  • The People’s Bank of China held its key rate steady at 4.3% today.
  • The Indonesia Central Bank is due to meet on Thursday and is also likely to hold rates steady.
  • However, the Reserve Bank of New Zealand is expected to hike rates on Wednesday.
  • A softer Q1:23 CPI supports the case for holding steady; however, the budget update showed a larger-than-expected boost for the economy, which has reduced recession risks. 
  • Locally, S&P ratings agency on Friday retained SA’s rating at BB-, with a stable outlook.
  • Looking ahead, the April CPI, due out on Wednesday, is expected at 7.0% y/y, from 7.1% y/y in March.
  • The SARB meets this week and is largely expected to hike the repo rate by 50 bps, to 8.25%.
  • The SARB’s leading indicator for March is due out tomorrow; the index slipped to 120.1 in February, from 120.9 in January.
  • The PPI for April, due out on Thursday, is expected at 9.1% y/y, from 10.6% y/y in March. 
  • Eskom: Stage 3 loadshedding is currently in place until 4pm; Stage 5 loadshedding will be implemented then.
  • Brent crude oil is down this morning, and down by 12.8% year-to-date.
  • The gold price is down this morning, and up by 8.3% year-to-date.
  • Brent crude oil is currently at $74.89/bbl; ($75.58/bbl*).
  • Gold is at $1975/oz ($1977/oz*).
  • SA CDS 319bps*, Brazil 214bps* and Turkey 663bps*.
  • Yields: US 10yr at 3.67%*, German bund at 2.42%* and SA 10-year generic at 11.98%*, SA’s R2030 at 11.16%*.

* Denotes Friday’s close. 

 Key events and data: 

  • 16h00: Eurozone consumer confidence (May)

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